Shares of Alcan Inc. rose after reports of possible takeover offers from Norsk Hydro ASA and Rio Tinto Group raised expectations of a bidding war with Alcoa Inc. for the Canadian aluminum producer.
Norsk Hydro, an Oslo-based energy and metals producer, is preparing a bid valued at more than $30 billion for Alcan, the Globe and Mail reported today, citing bankers close to both companies who weren't named. Rio Tinto, the world's third-largest miner, hired Deutsche Bank AG to advise it on a possible Alcan bid, the Age newspaper reported, without citing anyone.
Interest in acquiring Alcan follows a rise in the price of aluminum, which has gained 54 percent in London in the past two years. The Montreal-based company is attractive partly because it gets much of its power from hydroelectricity, keeping costs low compared with most other aluminum producers, analysts said.
Alcoa made an unsolicited $27.7 billion takeover offer for Alcan on May 7 after two years of talks between the two companies broke off in December. BHP Billiton Ltd. may make its own offer for Alcan, the Globe and Mail newspaper reported last week.
``Anybody that comes up with a bid will be outbid by Alcoa,'' Charles Bradford, an analyst at Soleil Securities in New York, said in a telephone interview. Alcoa, based in New York, has received financing commitments for $30 billion of loans from Citigroup Inc. and Goldman Sachs Group Inc., which gives the U.S. company the upper hand, Bradford said.
Shares Rise
Alcan's shares rose C$2.60, or 2.8 percent, to C$94.25 at 4:10 p.m. in Toronto Stock Exchange trading. They have risen 66 percent this year. Norsk Hydro's shares in France rose 1 cent to 26.10 euros.
``We're continuing to evaluate all the options in the interest of shareholder value and this includes ongoing discussions with third parties that we are not going to divulge,'' Alcan spokeswoman Anik Michaud said in a telephone interview. The company's board of directors asked shareholders to reject Alcoa's bid last week.
Norsk Hydro spokesman Thomas Knutzen and Rio Tinto spokesman Nick Cobban, contacted by telephone today, declined to comment.
Reports of bids for Alcan have surfaced since 2003, when the Times of London said BHP and Rio Tinto were separately preparing $40 billion bids.
Companies 'Circling'
Alcan Inc. started ``early-stage'' talks with Melbourne- based BHP, the world's largest miner, to help fend off an Alcoa takeover, the Globe and Mail reported on May 23, citing people it didn't identify.
BHP spokeswoman Tracey Whitehead wasn't immediately available to comment today.
BHP, Rio Tinto and Norsk Hydro ``are circling around now because neither one has an aluminum division on the same scale,'' Robert Mantse, head of mining at Dominion Bond Rating Service Ltd., said in a telephone interview. ``Alcan and Alcoa are true global aluminum companies, while the rest are regional at best.''
Norsk Hydro, Norway's second-largest oil producer, has annual aluminum production capacity of 2.4 million metric tons. That makes it the world's sixth-largest producer of the metal, according to data compiled by London-based metals consulting company CRU. Alcan can produce 3.5 million tons a year and Alcoa's capacity is 4.4 million tons.
Alcan's electricity costs are below the industry average, making it more attractive to rivals, Mantse said. ``Intuition, logic and knowing how to play chess would tell you that it would make sense'' for BHP and other global miners to bid for Alcan.
The combination of Alcoa and Alcan would create the world's largest aluminum producer and a company better able to compete against producers in emerging markets, Alcoa Chief Executive Alain Belda said after announcing Alcoa's offer.
Canadian Concerns
Canadian politicians questioned whether a takeover of Alcan is in the national interest.
Some $156 billion of announced foreign acquisitions in Canada in the past 18 months have raised concern that
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